What will global semiconductor industry look like in 2014?

BANGALORE, INDIA: Over the last few years, user experience has been driving the electronics industry. Users are forcing electronics companies to come out with increasingly innovative products every year. At the core of all these gadgets are specialized semiconductors. As a result, semiconductor companies are facing challenges like never before.

In 2014 mobility, video, application-driven design, and cloud computing will continue to be the big drivers of the electronics and semiconductor industries. Added to all this is an element that continues to emerge and that brings multi-fold complexity - the Internet of Things (IoT).

According to this McKinsey article, IoT consists of "sensors and actuators embedded in physical objects-from roadways to pacemakers- are linked through wired and wireless networks, often using the same Internet Protocol that connects the Internet."  This Business Insider article says Morgan Stanley estimates that 75 billion devices will be connected to the IoT by 2020.

All of these drivers significantly impact the semiconductors industry, from both a business and a technology perspective. On the business side, IDC reports say that the worldwide semiconductor market is projected to grow to $319.5 billion, a 6.9 percent increase from 2012 revenues of $298.9 billion. As in recent years, growth in mobile, consumer, and automotive segments continue to be the main drivers.

From a technology perspective, the IoT alone presents tremendous opportunities for semiconductors. Take Big Data, for example. Connected people and devices mean more data - a December 2012 IDC report titled "The Digital Universe in 2020: Big Data, Bigger Digital Shadows, Biggest Growth in the Far East" estimates that by 2020 the digital universe will reach 40 zettabytes (trillion GB).

Analyzing and extracting useful information from this Big Data will drive new applications in automotive, medical, energy, smart home, industrial, and other areas. All these applications require specialized semiconductors - a huge, multibillion-dollar opportunity for the semiconductor industry.

Another IoT example is residential electronics - in other words, electronics in the home. Jim Feldhan, president of Semico Research, recently argued that the forecasted market of 18 billion residential IoT appliances would equate to more than 160 billion semiconductors.

Apart from cost and tremendous time-to-market pressures, specialized semiconductors also have technical challenges such as: advanced node geometries, which pose manufacturing, timing, power, intellectual property (IP), layout, design closure, and lithography challenges; increased mixed-signal and RF content, which causes challenges in simulation, parasitics, timing, and integration between digital and analog blocks; low-power techniques, which add to design time and implementation complexity; IP, which is becoming a critical factor with the increased time-to-market pressures; and increased verification complexity and emulation, thanks to huge, complex designs and increased software content.

In order to help their customers be successful in this challenging environment, electronic design automation (EDA) vendors have evolved quickly to offer more cohesive and comprehensive design environments, IP, and services, as customers move up the electronics value chain to add more value for their customers.

At Cadence, our mantra is to make our offerings "integration ready," to offer, for example, not just tools and design IP but all the constraints, the verification IP, and in many cases software drivers to make our customer-engineers' jobs that much more productive.

Momentum for Indian semiconductor industry in 2014

India has seen some exciting announcements in 2013. Probably the one that has created the most buzz is the government approval of two semiconductor fabs. While opinion varies about the long-term viability of the fabs, there is no doubt that they have the potential to change the Indian semiconductor landscape by reducing imports and attracting international customers (and dollars).

The fabs will also help foster an ecosystem which will be built by home-grown entrepreneurs, much like what has happened with the automotive industry.

Therein lies the real promise for the industry - entrepreneurship! Recognizing that startups are critical for the future of electronics in India, the government has announced an electronics development fund (EDF) and support for electronics manufacturing clusters (EMC) to enable startups. Several venture capitalists have also shown interest in the local electronics industry. While we have seen some green shoots of startups, in 2014 we look forward to seeing many more of them.

The National Policy on Electronics created a stir when it was announced in 2012, and has gained some traction in 2013. We now look forward to more concrete announcements that will translate to action on the ground. Only then will we see the momentum that will realize the NPE's objectives of investments, employment, exports, and growth

The author is Corporate VP and MD, Cadence Design Systems (India) Pvt Ltd